KamKee International Ltd. (KamKee) expects its EBIT to be $1,000,000 every year forever. The firm can borrow at 9 percent. Frederick currently has no debt, and its cost of equity is 15 percent. KamKee is subject to a corporate tax rate of 20 percent. a. What is the value of the firm? (5 points) b. What will the firm value be if the company borrows $600,000 and uses the proceeds to repurchase shares? (5 points) c. What is the cost of equity after recapitalization? (5 points) d. What is the WACC? (5 points) e. What is the financial risk? Do you agree the statement that firms with higher financial risk will be associated with a higher cost of capital? Explain. (5 points)